‘Despite reclassification, POGOs must still pay taxes’

MANILA, Philippines — Service providers of Philippine offshore gaming operators (POGOs) are not exempted from paying taxes despite being classified as business process outsourcing (BPO) companies, government authorities said yesterday.

The Department of Finance, Bureau of Internal Revenue (BIR) and Philippine Amusement and Gaming Corp. (Pagcor) made the statement in response to the remark of Senate Minority Leader Franklin Drilon that treating POGOs as BPOs could result in billions of revenue losses for the government.

“Classification does not exempt tax. There must be express provision of law granting tax exemptions,” Finance Secretary Carlos Dominguez III told reporters.

Dominguez maintained that no POGO firms would be allowed to operate unless they are compliant with government laws and regulations, including those involving health and taxation.

BIR deputy commissioner Arnel Guballa agreed that classifying POGOs as BPOs does not affect their taxability.

He said tax incentives could only be granted if provided by law.

“I think the classification of POGO likened to BPO is just for an operational point of view in relation to ECQ (enhanced community quarantine). For tax purposes, POGO taxability still remains,” Guballa said.

Jose Tria, assistant vice president for Pagcor’s Offshore Gaming Licensing Department, clarified that companies classified as BPOs are POGO service providers and not the gaming operators themselves.

Tria said operators are subject to license fees and other regulatory fees from Pagcor and the franchise tax from BIR.

POGO service providers are required to pay Pagcor accreditation fees, as well as corporate income tax and withholding taxes on the income of their employees.

Tria said service providers are not eligible for tax breaks. – Delon Porcalla, Mayen Jaymalin